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2017
Mar 13

Law Firm Group Newsletter – Winter 2017

Winter 2017


Ramp Up Your Referrals:
How to Take an Active Role in Generating New Business
Kal Shiner, CPA

Referrals are typically the leading producer of new business for law firms. In other words, referrals mean revenue. Coming as they do from third parties, referrals might seem to be out of your control; however, you can actually take an active role in generating more referrals. Several steps in particular can pay off when practiced regularly.

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Do Good Work
The best way to generate referrals is to provide a strong work product. Satisfied clients who can personally attest to your work quality give the most credible referrals.

However, it is important to realize that “good work” extends beyond merely achieving the desired outcome in a matter. It also includes superior customer service. If you do not respond promptly to client inquiries or keep your clients up to date, they may not recommend you, possibly because they fear your poor customer service will reflect negatively on them. Attention to details can mean a lot to your clients and, in turn, affect referral volume.

Ask Clients for Recommendations
Get in the habit of asking your clients for referrals at appropriate junctures — when you are conducting intake, receiving compliments on your work or concluding a matter. Also, include a referral request in your e-mail signature line, such as “We always appreciate referrals.”

Why do this? Won’t clients naturally send business your way if they are pleased with your work? Not necessarily. It might not even occur to many clients that you are continually looking for new business, especially if they have visited your bustling law offices. That is why it never hurts to remind them that you value their business and would love the opportunity to work with other clients like them.

When you request referrals from clients, be specific and clear. By explaining the type of work you are looking for (for example, divorce cases or individual bankruptcy proceedings), you are less likely to receive referrals you cannot use. Also, provide clients with business cards that they can share with potential referrals.

Network Smart
Every attorney knows how essential networking is to building and sustaining a practice, however, not every networking opportunity is created equal. It can make more sense, for example, to speak at a small seminar with an audience full of potential referral sources than to deliver a keynote address for a major convention with attendees who are unlikely to provide many referrals.

You might find, therefore, that you can get more from being active in your local bar association than a national bar association (or vice versa, depending on your practice area). You should also consider joining sections for practice areas other than your own if those attorneys work with clients who could use your services. For example, business attorneys might benefit from networking with intellectual property lawyers whose clients are launching new ventures. This strategy works with non-lawyer referral sources, as well. Forming relationships with CPAs, financial planners, bankers and real estate attorneys can lead to new work.

Nurture Referral Relationships
Resist the temptation to think of a referral as a transaction. Ideally, a referral will mark the start of an ongoing relationship that includes numerous referrals over a long period of time.

To nurture these relationships, always thank sources for every referral, regardless of whether they translate to new work for you. Thank your source when you receive a referral, when you are hired and when you complete the matter. This will show your sincere appreciation and keep you top of mind with the referral source.

Finally, when the opportunity arises, refer business back to people who have sent work your way. The best personal relationships are two-way streets, and referral relationships are no different.

Worth the Work
Even in this digital age, there is simply no replacement for word-of-mouth when it comes to landing new clients. Making the practices discussed an integral part of how you work can help increase the odds of receiving referrals that grow your business and your bottom line.

Sidebar: Do Not Forget Ethics Issues
The rules of professional conduct do not prohibit attorneys from seeking and accepting referrals, but they do impose some restrictions on what you can and cannot do in this area. For example, you generally cannot:

  • Enter into exclusive referral agreements whereby you and a referral source refer clients only to each other (in other words, the referring party must be able to recommend more than one attorney to its client);
  • Neglect to disclose reciprocal referral relationships to clients;
  • Promise gifts or referral fees in exchange for referrals; and
  • Share fees with a non-attorney.

You can enter fee-sharing agreements with an attorney in another firm as long as the total fee is reasonable, the fee-sharing is proportional to the work involved (or both attorneys are jointly responsible for the representation), and the client agrees to the arrangement in writing. Ethics rules vary by jurisdiction, of course, so always check applicable local rules when in doubt.

For more information, contact Kal Shiner at kshiner@orba.com, or call him at 312.670.7444. Visit ORBA.com to learn more about our Law Firms and Lawyers Group.


Fraud Prevention:
It’s Time to Review Your Firm’s Internal Controls
Bob Rifkin, CPA, MBA

Fraud in corporate America is nothing new. Yet, many law firms overlook the issue in their own organization. Lawyers tend to place the firm’s day-to-day operations on a back burner, or to delegate it out to an employee who has been given a great deal of autonomy with little oversight, while the attorneys in the firm focus on serving their clients. Does this sound familiar?

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Does your firm have written policies and procedures in place that are designed to prevent fraudulent activities? For example, have you separated the responsibilities for opening the mail and preparing the bills? If you do have a system, when was the last time those controls were reviewed and updated?

Identifying Risks
Law firms enjoy certain protections from fraud; however, they also harbor specific risks. For example, onsite management by a team of professional owners can make it more difficult for thieves to carry out elaborate and costly schemes. However, law firm partners also are more likely to override internal controls. Even if you have internal controls, you must enforce and regularly update them. Otherwise, your firm may be just as vulnerable to fraud as firms that have taken no precautionary measures.

What’s more, work environments where there is considerable pressure to meet ambitious financial and performance goals can turn normally upright employees into lawbreakers. And, it does not help matters that some firms are lax in punishing perpetrators because of the fear of bad publicity.

Preventing Fraud
So, where to start? Review your firm’s policies, procedures and processes, and identify potential vulnerabilities. This includes hiring, payroll, billing, collections and IT security. At the very least, ensure that your firm follows these processes:

  • Screens Employees
    When you hire anyone (including lateral partners), perform credit and criminal background checks and verify résumé items related to past employment, education, military service and professional certification. The federal Fair Credit Reporting Act generally requires you to obtain a person’s permission to run a credit check, and some states allow credit checks only for positions with certain financial responsibilities.
  • Separates Duties
    Make sure no single employee is in charge of purchasing and approving vendors or receiving payments and depositing them. It can be difficult to spread duties among several employees in a smaller firm, so consider outsourcing some accounting functions. Also, never let a non-partner sign checks; this is perhaps the easiest avenue for fraud. You may even want to require that two partners sign checks above a certain amount.
  • Reconciles Records
    Reconcile overlapping financial records periodically. For example, compare receipts that are recorded in your billing system to revenues recorded in your accounting system and then cross-check those numbers with your bank deposits. Review paper and online bank statements regularly, looking for inappropriate transactions.
  • Conducts Surprise Audits
    Audits do not have to be top-to-bottom reviews of your firm’s finances; they can focus more narrowly on areas of concern, such as accounts payable. To discourage fraud, let employees know that unannounced audits are possible at any time, but do not let them know what data or records the auditors will review.

Training Attorneys and Staff
It should come as no surprise to you that effective fraud prevention starts at the top. In addition to a system of strong internal controls, no matter how large or small your firm is, management must project and encourage integrity and ethical behavior.

The first step in any internal control program is to make sure attorneys and staff members understand what constitutes fraud, and how they can steer clear of it. Describe and provide examples of illegal and unethical behavior, and explain how employees can help prevent and deter them by adhering to your firm’s internal controls. Also, specify the consequences of breaking the rules. For example, an employee who falsifies timesheets may be immediately terminated.

Train partners and managers in spotting potential perpetrators and suspicious behavior. People who commit occupational fraud may exhibit control issues, such as an unwillingness to share duties, files or billing records, irritability or defensiveness when confronted about irregularities, or unusually close associations with vendors. Provide reporting guidelines and a process for investigating such suspicions.

Avoiding Surprises
You may think that fraud happens only in the nonlegal sector at other law firms. To avoid any unpleasant surprises such as your firm’s sustaining damaging financial losses, ask your financial advisor to perform a thorough risk assessment. Use your advisor’s findings to create or bolster a comprehensive internal controls program. Then, make sure that these rules are enforced regularly and consistently.

 

For more information, contact Bob Rifkin at rrifkin@orba.com, or call him at 312.670.7444. Visit ORBA.com to learn more about our Law Firms and Lawyers Group.

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